Way.
We
are.
Welcome to the League of Women Voters program brought to you by the Columbia
Missouri League I mean Lang Blodgett Tonight's program is about T.D.'s
transportation development districts and similar entities it's about all the
different kinds of financing solutions that are being used today than volved both
the private and public and the. Participating in our discussion of three very
qualified citizens of Columbia Craig Van Matri attorney at law Dale
Whitman professor of law at the University of Missouri and Bill watt consistent
city manager welcome. Let's get started with Krag opening for us in
explaining what is a T.D.
Day well a crash development district is
a way for in effect public money to be raised for public infrastructure in
connection with a private development it's
a creature of the Missouri statutes there are
a group of maybe one hundred separate sections in the Missouri statutes that say
if you follow the rules and play the game this way then you can establish
a separate tax district is really not anything new because people had things like
public water supply districts and special ROAD districts for years to do that which
requires more money perhaps than a private individual to contribute towards
a particular road or sewer line and or. Or something on OWN those lines and yet
which. In effect allows the developer to push the process
forward much more rapidly than otherwise would be the case Craig when you talk
about these special benefit districts that T.D.D.
Is a little different than that is it in the sense that with
a special benefit district we normally just assess the property owners and they pay
paid just for a year that might be over a five or ten year period but they write
a check in the T.V.
Deal on the other hand but it's really coming out of the retail customers who buy
products in the retail stores within the district and so they're really paying the
freight for the improvements in the infrastructure so we're talking about
a special taxing district you bet all right and when we're talking about
infrastructure we're talking about road sewers all the bases actually not sewers
because now you just road segment out with this transportation that's right so
where you are going to asses and saw. Anything related to our anger I got to be
related to transportation and we're talking sales tax on. So you can do property
tax the reviews are actual assessments and I think you're going to see some of that
in the future I think it's come into that it's it's there's
a political dimension to that there's economic dimension to the so far the tv's in
Colombia haven't assessed anything other than the sales tax rate and the rate of
tax that they assess is just been an additional half cent because of political
pressure from the city the city doesn't really have as much political power over
T.V.'s as they would want when you see Bill reuniting is in the grizzly that they
would like to have a lot more control over T.B.S.
But they do have to approve it you know not really but they want to go through the
process we've got to back up
a little bit as you can tell you all know what you're talking about but now I have
to represent the public who's going OK what are we talking about to get started
it's in the state it's in the state law right let's get in this and it's been and
this type of developments been in there for about since one thousand nine hundred
ninety ninety right and it made the other away you know I gave her some ideas OK So
what happens when are can you give a good example of
a place that's done this how how they went through the process maybe we'll come to
you is actually
a pretty good example because we have I guess the eight of them currently approved
bill is that right around the tenth one the application just came in writing we're
likely to see some more I mean this Thursday I'm going to go for the circuit court
to try to get another one formed OK so it's something that the developer often
times it doesn't have to be I don't know of Burke but that's all the ones we are.
Were generated by developers OK so what what's the decision that the developer in
Columbia has to make about why he or she would want to do a T.V.
Day you know it's
a easy computation. The developer looks at the deal and says this project
this tract of land works much better for customer convenience attractiveness if
there are better roads and better access to the site better in effect
transportation amenities now the Missouri statutes allow for
a variety of different kinds of special tax districts to be created and when the
city says they don't have much control reside like. Oh it's true that legally they
don't as a practical matter they do have quite
a bit of control they've got the authority of the city and the fact that they're It
tends to be
a relatively closed group of people that do things and continually petition the
city in and you just know that if you don't generally satisfied the city with
respect to what they want that they will they will remember the institutional
memory as long and builds memory is very good. You have filed the first T.D.
Application in Columbia to John and I didn't file the first one I got the first one
Set up OK but there was one set up at Lake of the woods Well there's the first one
was advantage at center stage oh that's right and then later the Woodson and I
think we were certain we were the first that that actually started collecting taxes
and doing something with it but what I know that we think of the woods has been
collecting taxes for
a long time and when you did that to see store it picked up the seashore at the
very beginning the first one I did was shops in stating which was the biz came all
right OK let's work with that one cuz OK all of us go down there on stadium and
that's
a wide shopping area. It was decided that there were some road improvements I assume
that had to be made in that area so. Some kind of
corporation in order to do it Transportation did fell upon district my
understanding is that it's called
a political entity which means somewhere along the line somebody had to set
something up and then what did they next have to go through OK here's the steps
that you followed didn't catch you can set up
a transportation available district I could do one of my backyard would do any good
because I want retail sales done
a lot of retail sales going to it but the special assessments could be I could and
I could assess but that's ten cents per one hundred dollars and no the special
assessment doesn't have
a. Job and I was sad at the time especially with estimates as they're not about K.
So you're going to set up around things so you know what I mean set up
a corporation of some snow or that the district is
a separate political subdivision all cats like a water supply district OK has
a separate in effect in it the that the statute says if you follow the procedures
in the procedure in this case
a first thing you do is you have to get everybody who lives on this particular
tract to vote if nobody lives there then the owner of the property gets to vote
based on one vote per acre so let's say you've got
a developer who's got forty acres He's got forty votes if he's the only owner and
then he petitions a circuit court the circuit court then has
a hearing and decide whether or not it's in the public's best interest to create
this district and then when the judge enters that decree forming the district he
specifies
a date when they'll be an election of the property owner to elect directors and the
directors of that in
a tee which are for all practical purposes selected by the property owner can
property owners one voting for these directly. The directors then meet and they
govern the entity they assess the tax and they collect it although in
my case every single one of the ones I've collected I made
a deal with the city and this is where the city's leverage comes in Incidentally I
made
a deal with the city that the city would collect the tax and remit it to the various
purposes of the district including paying off bonds so when the city gets the
regular tax revenues that they're entitled to they also collect the T.V.
Revenues and keep it in their bank account until for any of these but rather than
that to do D.
Which could keep it narrow bank account I already have one that does that and there
is always
a there is one it told me there are now how do I have the republics now. How do we
as the public know when for example that's been paid off is there's
a special account right well that these monies are put in so not necessarily the
know the street by law can last for forty years typically the only lasts as long as
it takes to pay off their debt they incur to build the improvements that they were
formed to to fund in the first place OK So that would come ten years I
know him
a little short one hundred twenty but the district can also change the scope of the
improvements and add more that's right and in fact the center state district is
talking about doing that right Dow on some improvements on the other side of sixty
three so that essentially they'd sell bonds in year one but they may come back if
they have additional development they can support additional bonds can sell bonds
in Year seven and that would be because they've got more retail sales they've got
totally first part of the project was successful that's correct tracking customer
that's going to depend on what jurisdiction the story does and for example as to
who they're dealing with yes the T.D.
Day Yes the statute says that mode out must approve all T.D.'s in practical
application if there is no mo dot St and there they don't get too interested OK.
If it's on a local story for instance
a city street then the city must approve it OK now this is why I said that the
city's got approval power well but they only have approval power on the project on
the actual tangible work that's right it's only because they're working on the city
right of way. OK For instance to Craig's project the shops initially did no work
on the city right of way and so mowed up approve the plans not the city because we
were going to a stadium or work in the market not
a whole of I saw another good example of it would be the one that we did for the
grindstone Plaza right in that particular T. D.
Is going to pay the city back for the entire cost to put in Green Mill Road from
Providence all we were to do so that'll be a the city will get back about
a million and
a half bucks that right laid out for that road is there any auditing process that
goes on this year anyway for the public to like attend the meetings or to see him
on how all the provisions of the Sunshine Law and local government are applicable
to T.D.'s meetings are posted are they posted where one would say the Maurice was
terrible that that is on a door on a building is a weakness OK I give Craig
a lot of credit because he has always posted all of the meetings with the city on
the city's official bulletin board not all of our T.D.'s do that all right and we
always had all or all the T.D.'s I represent have their meetings at city hall we
post the notice that the city hall we give Bill and the people at the office there
at the city offices notice of the meeting and. We're trying to be as good neighbors
as we can given the fact that there is sort of
a tension here between the developed members the developers who want. These
projects done and they they would if they could spill over and use that money for
more than would be quote purely public in the city who thinks of the tax revenues
as being really theirs that they're grudgingly required to let us use and they want
to make sure that it's used in the right way so that nobody gets
a go for now doesn't T.T.T.
Get all of the tax revenues in that area that it covers are just
a percentage it the P.T.T.
Has to set a tax rate
a sales tax rate which could be as high as one percent of all car on top of
whatever I'm not talking or whatever is all rating and all about one city the
county in the state and so currently in Colombia what it will be at seven point
three D. Or five I think four or five OK so so T.D.D.
You would balance that potentially by as much as one percent but in fact I think
all of our T.D.'s have gone only to
a half of one percent on the sales tax and maybe the city furs and obviously that
there's also the potential for some customer resistance if the sales tax gets too
high in fact I was thinking about this in terms of just being an ordinary retail
customer if I want to buy
a big ticket item where the sales tax actually could amount to
a significant amount of money well I might decide to go across the street outside
the T.D. And save that sales tax and if it's
a one percent and let's say I'm not going to buy a big screen T.V.
My wife won't let me but if I did and I spent say three thousand dollars on it well
that's thirty dollars of sales tax and naturally if it were one percent and I might
prefer to go someplace where I don't have to pay that extra thirty dollars and half
a percent it's not so much. After all
a retailer has to think about whether their customers will be put off by having to
pay that we knew our Exactly right every single one of my clients tenants any
consequence is most uncomfortable with the fact that they've got to pay
a little bit more in tax then someone across the street and they want to be in
a consistent taxed history because they think it'll put them in
a competitive disadvantage if you only spend twenty dollars no matter but if you're
spending two hundred or two thousand dollars then you're after
a while talking about real money and what does any markets for her binaries you do
know what the what the taxing districts are waiting to go to shop for big ticket so
that's another reason I think that the. Rate has been kept out a half
a percent just because of that feeling you don't want to price yourself out of the
market with additional sales but the primary reason is the cities of the city which
is belief that if it were more than a half
a cent that they would have problems getting future tax extensions or increases
past and I think we saw
a little of that last November at least that was an issue I never heard it
articulated as
a reason why people voted against it I did I think both Bill and I think I heard it
a number of service clubs that people said well you say the current tax if this
path this is the proposition five which would have been an additional one eight
percent tax and we would say well it will only be seven point four seven
point five something some point four seven five something like that there's Yeah
but you're not counting the transportation to develop it just hurts right and there
are already eight of them and they charge an additional half
a percent so you're not really giving us the full impact of what this will be on
top of that and of course at last it failed but to say the cause and effect was the
tax and they could not direct it was what I would if it was it was a factor or
a fact and I believe it at least from my perspective that one of the lessons from
November eighth was that people just don't want to pay more tax Yes and that there
is
a limit to what people will pay and we're pretty close to it was that old rule years
ago when they said temper Sam. Was about the maximum you could ask and saliency my
sister did he say that around here is Americans used to be seven and we were always
a little nervous about going over seventy seven but but the interesting thing about
the D.V.D.
Is the voters at large don't vote on it. If you will be exempt from the Hancock
that well they vote with their feet that's right if they decide not to patronize
that retailer do you know in all blame vote for it in all practicality you go in
Columbia there will be probably by the end of next year very few major retail
outlets that are in a T.D.D.
Particularly if you look in terms of percentage of sales. You know probably.
Hazard
a guess but I'll be sure it's well over seventy percent of retail sales are going
to be in
a transportation development let me put you on the spot here because an equivalent
statutory scheme Jean. Yes I use the term going to sites as well
that's just what I think we've got going again will instead stories is
a Community Improvement District that's correct which has
a broader range of projects that you can spend months very on exactly the same set
up except that it's established by municipal ordinance right but again don't you
have to have
a vote the vote though again is of the properties of the property owners you have
to have one of majority of the property owners to his own I could have with each
one of these T.D.'s we set up having to see ID instead of Community Improvement
history and had
a broader range of projects that we could build. All the public nature that's
correct so what do you think the city's attitudes are going to be towards formation
of cods in lieu of T.V.
These the cities they have greater control Well I think that was what we used as
really the stick in trying to pull people together on stadium we said guys isn't
fair you can't have some in and some out paying for. The stadium and permits
and unless everybody decides to play in
a sandbox the city will come in and we will impose a C. ID C.
ID also has some unique opportunities in terms of property taxes and I think you'll
begin to see see I.D.'s in residential neighborhoods and fact I know that's being
discussed by
a couple of our residential developers to pay for as you said are more broad based
but streets and other public infrastructure sewer storm water but the
party you acknowledge that we have you here do you acknowledge that these
organizations do take
a lot of political pressure off and you don't have to go out and try to pass
a tax revenue stream to address a particular situation you could have
a Community Improvement District the city would have more control over and assess
taxes within the area property taxes including to address for
a variety there were things in addition the trend we have as
a city and I think most cities have assessed based on benefit streets sewers all
sorts of public improvements and this is really. Not
a whole lot different than than what we have done for years for very specific
purposes worried there was a specific benefit that could be assigned to
a particular piece of property state law allows you to assess and in fact I think
we did tax bills last night on the street so. There's no real difference well I
don't see any difference either and I guess what I'm about to suggest is that I
think you'll see the see ID is now becoming equally popular with Tea. Not wrong
with X.-Plane want to look at how are we go are not messes that the same set up
before it not always is there I'm not necessarily true critic that T.D.'s have
largely run their course in Columbia that is there just isn't as Bill said very
much aggregated retail space left that isn't it a T.D.
You know when Justice Scalia was here given his lecture he was talking about how
the stock market was catching his breath you know how ridiculous that sounded and
they are catching their breath because right now we're overbuilt in retail and
apartments and Office Office have solution and so the town is going to have to grow
to absorb that but as soon as it does you'll see another surge of the is almost
a statutory arrangement is changed but I think the next time around it would
behoove the city to say don't do the T.V. Do a C. D.
Let us have control but we'll work out
a list of projects here and then T.V.'s will be less popular and cods will be more
popular because the city will say so many words let us help you do this right. But
in the context of that we'll have more much more control over it but right now on
what grounds can a circuit judge deny a T.D.D.
I mean our position is very very very limited he doesn't have
a whole lot of secrets meets the statute if it meant to stand that disagreeing with
you he has to approve it that's right so you're either going to get the T.V.
Statute tinkered with in the state legislature to deny to developers the ease with
which they are formed then well I think then I don't so yes him that the minutes
believe in the cities of take and in fact we tried to do to have introduced last
year was simply to change the process that you had to come and do
a development agreement with the city prior to going to get your petition much like
you have to do with mode you know if a state that's very well that makes
a lot of sense as
a practical matter though Bill you haven't had developers with T.D.'s who have sort
of just gone off on
a tangent without consultation with the city have you well I think yes we have well
in your show you have I think we have that and so that statutory change when you
have that happen can the public still find out anything about them and can they
still be audited is there
a way to get there start right now and then demand that you would that you clarify
that none of these or any number go down you know. Well I'm not so sure about that
are there one there are smiley I still have real problems with. What the city's
going to be collecting the taxes here and there's going to be
a development that's correct but we're funding in my opinion my humble opinion we
are funding infrastructure that developers should normally pay OK Well we have
a philosophical disagreement there I mean you are saying morally I'm saying legal I
understand legally you've got the right to do it or we would probably have stood up
and you know you know but. We had no real ability to do that and Bob and I
had our real ability and this is really kind of what ticks me off is that. Our
real ability is to approve the street plans for
a local right away which we did we work with the developer got them approved and
then found out that they were going to be funded by T.D.D.
After a fact so that we had lost our handle to say oh wait
a minute guys this isn't right you initially thought the developer is going to
write
a check for sure and that's the way it normally works we approve the plant we approve
the plans and then the T.T.D.
Was formed although it is true that legally there isn't anything wrong with that no
illegally it's
a hard one to have not already did is that all of us are paying through sales tax
the bottom line is saying that's the same problem months by sales tax the bottom
line is the consumer is always going to pay for all of that's right because it's
all funded by sales taxes the city's major source of revenue is sales taxes so.
You know eventually the consumer pays for all and if the consumer doesn't pay who
or it is a set is up goes broke and one fact if you think of the case in which
a developer as Bill was saying about this other project simply writes
a check for street improvements which is not unusual we've got
a number of users like that well that adds to the developer's cost and that cost
has to be recovered in the rents from the project and ultimately the tenants and
the customers of the tenants are going to pay for that then the free look and the
reason we have T.D.'s is why well because I think that us as both
communities have unfilled deeds for transportation to prove some think if you go to
any city that I'm familiar with They've got
a long laundry list of transportation projects that need to be done and so this is
the shortest way that up quick
a developer can say OK this may not be the highest priority but it's on your
priority list and you know we're going to take this and we're going to fund it with
this revenue is there any way that developer could fault and I mean that this arc
and I say. This political and that they could default see that's that's the thing
that needs to be stressed here when these improvements are made the developer puts
up the money that's correct and the developer is gambling that the revenues little
be generated from sales within that project will be sufficient to generate enough
sales taxes that will pay off that debt and if that doesn't happen the developer is
going to have to write the check for the unfunded portion so it's the it's
a terrific economic gamble you know the one hand on the other hand if they know
what they're doing they get the money but not really the money but they get
interest. And Elaine it's very important to recognize that this is not into the
city of Columbia this is
a debt of this little political entity and we actually have elders created and
nobody else so so the taxpayers at large if there were
a default if the revenues from the sales tax fell off for some reason maybe we went
into a recession or maybe the store just turned out to be
a terrible place that nobody ever want to shop but that would never fall back on
the taxpayers of called large That's right and it doesn't take
a day's drive the development in certain directions and sat part of it to where the
taxpayer you know this isn't smite not want to go in
a particular direction but this might be
a driver to go and particular geographic location or that where there are two big
limitations first the money's got to be spent on transportation related projects
and the second the way we're doing them the money's got to come from retail sales
that means that a T.D.
For an office project and make any sense there aren't any significant retail sales
there T.D.D. For residential projects doesn't make any sense Likewise a T.D.D.
For sewers or for storm drains doesn't make any sense because they're not
transportation related so it's quite limited OK we've probably got less than
a minute now I have to close any one last statement by anybody I don't think
they're
a bad idea and. They worked out pretty well for you Alpheus I think they're very
good as well they're they're
a way of getting things done much earlier than I was really hurt and I think Bill
recognizes that although. My last point is that on the C I.D.S.
If
a city made those more attractive T.D.'s would fall by the wayside I think and and
so I think that's where we'll will be headed as the climate continues to grow. OK I
want to thank all of you for coming again let me get those names Bill Watkins Craig
fan Matri and Dale what man have joined us this evening to talk about T.V.
Days and probably you can get more information from me at any of them if you need
it on T.V.
Days and other various ways to finance projects thank you for joining us good night
.
We're. Sure.
The faith.